New Flood Legislation Does Little to Halt Expansion of Private Market Flood Insurance Program

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“The recently passed Flood Insurance legislation will not have an impact for a year or more and there is still a tremendous current need for our Private Market Flood Program,” said Evan Hecht, CEO of The Flood Insurance Agency.

Gainesvill, FL (PRWEB)March 15, 2014

Regardless of whether or not one agrees with Congress’s decision to amend certain provisions of the Biggert-Waters Flood Act passed in 2012, everyone should realize that almost all of the rate relief in the new bill will not occur for a year or more.

Steve Harty, Vice Chairman of National Flood Services, who process FEMA policies for many of the WYO insurers, had this to say; “H.R.3370 specifies timetables for implementation of these reforms. It is highly unlikely that any H.R.3370 reforms will be implemented in less than a year. Please keep in mind that while BW12 was signed and enacted July 2012, its first provisions were not implemented until the October 1 changes in 2013, 15 months later. BW12 will remain the law under which WYOs, agencies, and NFS will operate for the foreseeable future. Nothing will change until FEMA issues rules, regulations and interpretations. Despite passage of this bill, nothing changes right now in requirements for new policies, for renewals or for any other aspect of the NFIP program.”

“The recently passed Flood Insurance legislation will not have an impact for a year or more and there is still a tremendous current need for our Private Market Flood Program,” said Evan Hecht, CEO of The Flood Insurance Agency.

While the new legislation calls upon FEMA to refund a portion of the premiums paid for some properties whose subsidies were removed, these refunds will not occur until after FEMA has interpreted the new law and has issued new rules and regulations. Many consumers are not in the position of paying a premium they cannot afford now and waiting for a refund that may be a year away. Some people simply do not have the funds available to do that.

Home buyers may not be able to purchase an expensive FEMA policy now, wait for a refund, and still qualify for a mortgage. Some will simply not have the funds in addition to a down payment to purchase a property. Others will not qualify for the inflated estimated monthly mortgage payment adjusted for the expensive FEMA flood policy.

The “sales trigger” will continue to plague the housing market for a year as well. While the new legislation instructs FEMA to allow for a buyer to assume the seller’s flood policy at the sellers existing premium, almost half of the properties in flood zones where flood insurance is required for the buyer to obtain a mortgage are uninsured currently. A buyer cannot assume a policy that does not exist. Additionally, many mortgage lenders will not accept assignment of a policy that has less than six months remaining term. Because flood insurance premiums are escrowed the lenders do not have sufficient time to accumulate enough escrow funds to pay for the renewal if it is only a few months in the future.

For the most part, subject to FEMA’s interpretation, non-primary residences and commercial properties do not receive the same benefits afforded by the Homeowner Flood Insurance Affordability Act of 2014, intended to provide relief to Homeowners.

Our Private Market Flood Insurance, http://www.privatemarketflood.com, remains a tremendous alternative for many property owners. We intend on continuing to grow the program and we are proud to announce that next week we are expanding the availability of the private program to Mississippi, North Carolina and Massachusetts.

The coverage provided by our Private Market Flood Insurance policy, underwritten by certain underwriters at Lloyd’s of London, is exactly the same as the FEMA policy. The program is available for residential properties and commercial properties with a replacement cost of under $5 million dollars.

The private program started selling policies four months ago and has already appointed over five hundred independent insurance agencies to market the program in fifteen States. Next week we will begin appointing agents in Mississippi, North Carolina and Massachusetts.